Funeral plans – The Good Funeral Guide

The Climate Emergency. Could your funeral plan be part of the problem?

As the UK government congratulates itself on its decision to expand UK fossil fuel exploration, something that is perceived internationally as disastrous, it seems timely to publish this latest piece from our green correspondent:

“We’re starting a journey. We want to understand how funeral plans are potentially fuelling climate breakdown.

This is a new campaign by the Good Funeral Guide which aims to help people who buy funeral plans better understand the environmental impact of their investment.

We’re going to start with some numbers:

According to the Financial Conduct Authority there are around 1.6 million funeral plans in existence, held by 26 regulated firms. This does not include those life insurance policies that cover funeral expenses.

Now, according to Funeral Solution Expert calculations, the cost of a funeral plan is between £1,400 and £4,400, depending on whether you opt for a basic or a higher level plan.

The average cost of a plan is £2,800. The total value of held plans is therefore, by our calculations, currently somewhere between £2.2 billion and £4.5 billion.

These plans are typically held by trusts and whole life funds, which spread the funds across a range of assets such as equities, infrastructure, credit, diversified growth and index-linked gilts.

Equities, diversified growth and credit are all exposed to fossil fuels, meaning that these asset classes are funding the extraction of and exploration for oil and gas. The burning of which is the predominant cause of the climate crisis.

Analysis by the Good Funeral Guide suggests that between 15% and 60% of a typical funeral plan is invested in equities.

Let’s say the average is 30%. Would that then mean the funeral planning industry currently has something like £1 billion of funds exposed to fossil fuels, contributing to the destruction of Earth’s life support systems?

Of course, not all of the £1 billion is invested in fossil fuel companies but it’s likely that the figure runs into tens of millions of pounds, at the very least.

How plan providers stack up

We’ve trawled the websites of some of the UK’s best known funeral plan providers for information about how they invest the money that people trust them with.

Golden Charter – around £459 million of Golden Charter’s funds are invested in global equities, diversified growth and multi-strategy credit, suggesting that potentially at least 35% of its £1.3 billion-fund is exposed to fossil fuels. It’s good that Golden Charter makes its investment information available in the form of annual reviews, however, the reviews lack granular detail about environmental impacts.

Golden Leaves – Golden Leaves funds are managed by the Golden Leaves Trust and according to its website these are invested in index-linked gilts. These are likely to be UK government bonds and are said to be as exposed to fossil fuels as the wider economy.

Golden Leaves website also states that some plans (zinc, silver and gold) when taken as fixed payment plans are used to buy a whole life insurance policy from SunLife. SunLife is part of the Phoenix Group, whose investments are currently exposed to fossil fuels. However, the business has published a plan to be net zero by 2050.

Open Prepaid – According to the company’s website, the Open Trust Fund invests in equities, which as we’ve learnt are directly exposed to fossil fuels. We were unable to find information about the breakdown of assets held.

Avalon Funeral Plans – Avalon Funeral Plans website appears to offer no information about the nature of its investments, other than to say that its trust invests through “recognised investment funds”. We can safely assume that there is some exposure to fossil fuels.

Ecclesiastical – Ecclesiastical’s funeral plans are held in an insurance policy which is linked to investments that could be exposed to fossil fuels, our research suggests.

Co-operative Funeralcare – according to our research, Funeralcare’s funeral plans are Royal London life insurance policies, which will be exposed to fossil fuels. However, Royal London has made the same commitment as Phoenix to be net zero on investments by 2050.

Dignity – Dignity’s website states that funeral plan money is held in the UK Funerals (2022) Trust. We were unable to find information about which assets this invests in, but we should assume exposure to fossil fuels. Dignity’s National Funerals Trust 2022 report shows potentially huge exposure to fossil fuels as equities and credit account for 74% of assets held.

Our summary

As we said at the start of this blog, we’re on a journey of understanding here. We welcome information from funeral planning companies that clarifies their funds’ exposure to fossil fuels.

If we have it wrong, we’ll correct the record. But we will accept no opaque comments. We want figures and percentages that deliver clarity to the funeral plan-buying public.

In summarising our research, we make the following four observations:

1. Funeral plans for gas-powered cremation funerals are funding climate change, as the end product or service is a fossil fuel-based process.

2. No funeral plan provider’s website FAQs section has a question about the environmental impact of their investments. This needs to change. All funeral plan providers should publish a public statement outlining their current environmental impact status, detailing the steps being taken to reduce exposure to harmful financial products.

3. Despite FCA regulation, funeral plan investments are incredibly opaque. The public will struggle to find any user-friendly information about the types of assets held and what they mean.

4. Most worryingly of all, no funeral plan provider has a green investment plan. Or if they do, they are doing a fantastic job of hiding it on their website.

Next steps

Thank you for reading this blog. The next steps are to apply pressure. And we can all do this.

We will be writing directly to all UK funeral plan providers once this blog is published, asking them to provide us with direct and up to date information that we can share with our readers.

If you are someone who holds a funeral plan to cover your future funeral costs, then please write to your plan provider and ask them for accurate and easy to understand information about their investments and the environmental impact involved. Ask how they are reducing their exposure to / investment in fossil fuels and the timescale involved. They have your money, and you have a right to ask them what they’re doing with it.

If you’re a funeral director – and an appointed representative to provide funeral plans – and feel you should be fully informed about the environmental impact of the funeral plans you offer, please write to your plan provider. We have a template letter here that you can download and use.

Join us on our journey to understand this opaque, multi-million – or billion – pound market, and if need be (it will be!) – to start pushing for change.

Let’s make sure funeral plans are what they are sold as; a way for people to plan for and pay in advance towards their own future funeral costs, not covert vessels for contributing to planetary destruction.”

Funeral plans – a bonfire of vanities

If you or a member of your family have taken out a pre-paid funeral plan, read on. Important information below!

On Friday last week, the crowded funeral plan landscape suddenly became a little less bustling. Quite a lot less, actually.

On 29^th July 2022, the Financial Conduct Authority took on the regulation of the funeral plan market, and with immediate effect, almost two thirds of funeral plan providers have been refused permission to sell new plans, leaving just 26 funeral plan providers that will be authorised by the FCA.

There were, until 29^th July, around 70 companies selling funeral plans in the UK. Some large, with enormous amounts of money invested, some small. All were required to apply to the Financial Conduct Authority (FCA) for authorisation after the government legislated in January 2021 to bring pre-paid funeral plans into FCA regulation.

The market had been, until last week, completely unregulated, and over the years there have been various high-profile collapses of funeral plan providers, leaving customers who thought that their funerals were organised and paid for in the distressing position of finding out their money had been lost, and that there was absolutely no redress.

The most recent company to go into liquidation is Unique Funeral Plans, which announced on 22^nd July that its 3,000 customers would not receive refunds, nor would their funeral plans be transferred to alternative providers. The previous week, on 14^th July, Not for Profit Funeral Plans Ltd was placed into liquidation with all funeral plans terminated with immediate effect.

This came just weeks after approximately 45,000 people who had purchased a funeral plan from Safe Hands Funeral Plans were told they could expect to receive back just 10% of the plan value by administrators, after that company collapsed into administration in March.

Temporarily, Dignity Funerals Ltd has agreed to fulfil all funerals of Safe Hands funeral plan holders for six months from 11^th May 2022, and they are contacting all plan holders offering (for additional contributions) a replacement funeral plan from Dignity, see details here.

Curiously, at the same time, Dignity have paused their sale of funeral plans, quite a decision for a company that usually sells around 1,000 plans a week!!

Anyway, we digress.

13 further plan providers that applied for FCA authorisation have not been authorised. These companies are permitted to continue administering existing funeral plans until 31^st October, but they are prohibited from selling any new plans. By 31^st October, they must transfer their plans to authorised firms or refund their customers. They are permitted to continue receiving instalment payments, if you already have a plan with them, and they should be contacting you to let you know what’s happening. Make sure you respond to any communication you receive where required.

Plans offered by these 13 companies are not covered by FCA regulation, meaning there is no protection by the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS) until they are transferred to authorised providers.

You can see the full FCA list here, showing the 26 companies that the FCA is authorising, the 13 companies that are permitted to continue administering plans and a non-exhaustive list of 10 companies that must not sell or administer plans.

It is estimated that there are almost two million people in the UK who have taken out a funeral plan to cover the costs of their funeral, and 87% of this market (around 1.6 million plans) are provided by the 26 providers now authorised by the FCA, meaning that customers will now have access to the Financial Services Compensation Scheme, so their money is protected if their provider fails. 

Planholders with authorised companies can also make a complaint to the Financial Ombudsman Service even if the issue they are complaining about happened before July 2022 if the firm was registered with the Funeral Planning Authority (FPA) at the time the issue occurred.

The FCA will monitor adherence to the new regulations that have come into force, which include:

A ban on cold calling.
A ban on commission payments to intermediaries, such as funeral directors.
A requirement for a funeral plan to deliver a funeral unless the customer dies within two years of taking out the plan, in which case a full refund will be offered.

Finally, it seems, purchasers of pre-paid funeral plans can have confidence that their chosen provider is both reputable and reliable, and that their money will be safe.

Here at the GFG we have a pretty jaded view of the entire principle of encouraging people to decide and pay for their funerals in advance, and we’ve written extensively about our misgivings.

We have argued that advance payment ‘for peace of mind’, as it’s advertised, is actually entering into an expensive transaction that often leaves bereaved families without choice or control of an event that is supposed to be for them, not for the person who has died. Read this blog post from 2019 which shows just how unsatisfactory – and financially unbeneficial – a funeral plan can be.

We understand that many people worry about the costs of funerals, and that, for some, paying for their funeral arrangements in advance is an attractive prospect, particularly with the escalation in funeral costs that continue relentlessly year on year. Securing funeral services at today’s price seems both sensible and responsible, particularly for the prudent generation reaching their 80’s and 90’s, something that has not gone unnoticed by the marketing teams of funeral planning companies.

Until now, people purchasing pre-paid funeral plans have had to hope that their chosen plan provider was a secure and responsible entity, and that the ‘stress and worry of planning a funeral’ was all taken care of with the stroke of a pen on their cheque as they sent the forms back in the pre-paid envelope helpfully provided. There was, though, no guarantee of this.

Finally, with the oversight of the FCA now in place, people who want to settle their funeral arrangements in advance will be able to have confidence that their money is safe and that their decisions about their funeral will be carried out as they wish.

This FCA safety net has been needed for a very long time, and we are relieved that it is now in place.